Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing…

Fowler Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.

Costs Incurred

Production in Units

5,000

10,000

Total Cost

Cost Unit

Total Costs

Cost Unit

Direct materials

8,250

1.65

16,500

1.65

Direct labor

9,400

1.88

18,800

1.88

Utilities

1,400

0.28

2,300

0.23

Rent

4,000

0.80

4,000

0.40

Maintenance

800

0.16

1,200

0.12

Supervisory salaries

1,000

0.20

1,000

0.10

Instructions

(a) Define the terms variable costs, fixed costs, and mixed costs.

(b) Classify each cost above as either variable, fixed, or mixed.

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